City of Oklahoma City conferring with large hotel chain

How did we get here?

March 2009: Conventions, Sports & Leisure (CSL) completes a market feasibility study on a new Oklahoma City convention center for the Greater Oklahoma City Chamber of Commerce. According to the executive summary, CSL recommends OKC pursue a convention center facility with 200,000 square feet of exhibit space. The study calls for a new headquarter hotel with 650 rooms and 50,000 square feet of meeting/ballroom space.

December 2009: City voters approve a sales tax initiative to improve quality of life though eight distinct programs, including a new convention center. Over time, the sales tax increase would generate $777 million to fund the projects.

March 2010: Urban Land Institute releases a report indicating a 700-room convention center hotel in OKC would cost between $200 to $220 million and require around $50 million in public funding.

June 2013: Oklahoma City Council approves a resolution authorizing the Urban Renewal Authority, a partner of the Alliance for Economic Development of Oklahoma City, to lead negotiations for potential development of a hotel.

December 2013: Oklahoma City Council receives two key economic impact and market studies on the proposed convention center hotel. The Urban Renewal Authority, through the Alliance for Economic Development, obtained the reports from Stone Hospitality and Real Estate and Oklahoma City University Meinders School of Business Steven C. Agee Economic Research & Policy Institute.

Stone estimated a convention center hotel would reach 56 percent occupancy in the first year, followed by 64 percent the next. The hotel would average 66 percent occupancy in 2022. The study also estimated the city lost around 100 conventions and events due to a lack of rooms since 2009.

Local university economic expects indicated a convention center hotel with meeting space would come with a $200 million price tag. The study concluded that for every 10,000 convention attendees drawn to the city, local economic output would increase by $1.6 million.

March 2015: Seven proposals are submitted to the city. Councilmembers Larry McAtee and David Greenwell were chosen to serve on the selection committee.

Sept. 21, 2016: The selection committee meets with the two finalists, Marcus/Mortenson and Omni Hotels & Resorts. The committee unanimously recommends Omni. The Dallas-based luxury hotel brand estimates a development budget of $235.5 million and requests $85.4 million in taxpayer support.

Sept. 27, 2016: In a 7-2 vote, Oklahoma City Council approves a resolution authorizing city staff to continue talks with Omni Hotels & Resorts and to work toward a publicly assisted funding plan.

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After years of talk about the prospect of a convention center hotel, the path toward a full-service facility with luxury amenities near the proposed MAPS 3 Convention Center became clear. Last week, City of Oklahoma City staff entered negotiation proceedings with Omni Hotels & Resorts.

The Dallas-based company proposes constructing a $235.5 million, 600-room convention center hotel between SW Third and SW Fourth Streets along S. Robinson Avenue. If the city and Omni strike a deal, the hotel tower would grace the skyline in 2019. Omni predicts a 71 percent occupancy rate and an average daily room rate of $193 after four years in service. Revenue from nightly stays and food and beverage is expected to top $51 million annually, according to figures provided by the city.

With Omnis proposal comes a call for public money to flow into the project. The city could give $84.5 million in tax subsides to the hotel chain owned by TRT Holdings, one of Texas billionaire Robert Rowlings companies.

The issue of subsidies raises debate among the nine Oklahoma City Council members, a group previously split on whether taxpayer dollars would be required for a convention center hotel. For years, optimism ran through the council horseshoe that public assistance wouldnt be needed, despite repeated studies that suggested otherwise.

Ward 2 Councilman Ed Shadid, a frequent critic of the perceived necessity of constructing a new convention center hotel, advises taxpayers will likely contribute greater than $85.4 million toward the project. Public funding for the hotel could include public borrowing, increasing the hotel-motel tax or initiating a rental car tax. The city could finance its share through tax-increment financing, known as TIFs.

Additionally, the city budgeted $7 million for acquiring the land where the hotel will be located. In late September, the city moved closer on parking for the convention center and hotel but is about $10 million short on estimated project funding.

When you figure in the $7 million we will need for the land, the $10 million they are trying to get for the parking garage, the more than $30 million in interest we will have to pay on the loan and the $85 million in subsidy, we are in the $125 to $130 million range, Shadid told Oklahoma Gazette.

In comparison, the city budgeted $131 million toward the MAPS 3 Streetcar project. During the Sept. 27 council meeting, Vice Mayor James Greiner stated the public funding piece could be a MAPS 4 project. Grenier joined Shadid in voting against the resolution authorizing further discussions. The vote was 7-2 in favor of negotiations with Omni, which is seen across the country as the convention magnet with its hotels positioned steps away from convention centers.

Supporters of convention center hotel development believe the facility will increase the success of the MAPS 3 Convention Center, which is more than double the size of Cox Convention Center. Many city leaders believe the hotel would attract groups whose members plug money into local restaurants, shops, attractions and more.

Oklahoma City joins a number of American cities in building convention centers or expanding existing centers.

Next month, city staff expects to return to the council with Omni negotiations complete. Tom Morsch, a city-hired consultant, advised the subsidy could be negotiated lower than the estimate. Although Morsch also said similar projects in cities like Kansas City, Louisville and Nashville called for additional public support. The City of Nashville paid $150 million toward an Omni project located near Music City Center.

Omni is well established in the convention center hotel market with developing and operating hotels in Fort Worth, New Orleans, Dallas and Nashville. Omni is constructing a site in Louisville, Kentucky, adjacent to a convention center.

We are going to be competing against Nashville, Forth Worth, Louisville, Dallas and Denver, Morsch said. Thats where you want to be. ... We wanted to be with those cities, among those cities, competing like those cities and growing like those cities.

Print headline: Forward movement, OKC is in talks with Omni over a convention center hotel, but the deal wouldnt likely come without public investment.